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13d Filings

13D Filings

July 19, 2014 3:13 a.m. ET

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13Ds are filed with the Securities and Exchange Commission within 10 days of an entity's attaining a greater than 5% position in any class of a company's securities. Subsequent changes in holdings or intentions must be reported in amended filings. This material has been extracted from filings released by the SEC from July 10 through July 16, 2014. Source: InsiderScore.com

On July 11, Red Alder Group entered into an agreement with Speed Commerce granting Red Alder the ability to appoint two new directors to Speed Commerce's board. Pursuant to the terms of the agreement, Speed Commerce said it would increase the size of the board to 11 directors. Red Alder agreed not to nominate any person for election as a director at the 2014 or 2015 annual meetings, and also agreed not to submit any proposal for consideration or bring up any other business at those meetings.

Red Alder disclosed that it increased its holdings to 5,696,228 shares after it purchased 200,000 shares from June 30 to July 1 at prices ranging from $3.68 to $3.77 per share.

Original Filings

Discovery Equity Partners disclosed that it owns 1,479,167 shares (5.9%) after its purchase of 719,485 shares from May 13 to July 10 at prices ranging from $9.35 to $14 per share. Discovery also declared that it acquired the shares of common stock because it believes their trading prices "do not adequately reflect the potential value of the company's underlying business and assets."

Gamco Investors
(ticker: GBL) disclosed that it now owns 3,061,419 shares (8.9%) following its purchase of that number from July 2 to July 8 at prices ranging from $7.97 to $7.99 apiece. Previously, on July 2, Vitacost.com announced that
Kroger
(KR) would acquire it for $8 per share. That purchase price represents a premium of 51% to Vitacost.com's closing price on Feb. 19, the day before a major shareholder asked it to evaluate strategic alternatives. Gamco did not disclose any specific plans or proposals for the company.

Decreases in Holdings

Luminus Management decreased its holdings to 27,985,610 shares (6.6%) after it sold 13,213,372 shares on July 8 at $23.57 per share. Luminus sold the shares to Calpine according to a share-repurchase agreement.

Relational Investors decreased its holdings to 6,381,416 shares (7%) after it sold 1,875,119 shares from June 4 to July 10 at prices ranging from $47.65 to $66.57 per share. Timken completed its spinoff of
TimkenSteel
(TMST) on June 30, following an original plea for a spinoff from Relational on Nov. 19, 2012.

Behind the Scenes: This is a textbook activist opportunity—a company with a strong core business and a CEO who's shooting for the moon by pouring cash from a profitable business into an unrelated business that isn't panning out. Oplink's optical-component unit has a strong market position and solid gross-profit margins. The company is spending half of the cash flow from this business on Oplink Connected—a home-security business for consumers. This business may have a good product, but it lacks distribution and marketing and would be much more valuable in the hands of an investor with distribution and marketing channels. Merely closing it would bring $16 million a year to the bottom line.

The board, which appears to be extremely loyal to management, could benefit from the addition of a shareholder representative. Oplink's current lead director, Chieh Chang, was the CEO of BCD Semiconductor at a time when Oplink CEO Joseph Liu served on the BCD board. Barring a negotiated change to the board's current composition, it is likely that Engaged Capital will nominate two of its own directors.

-- Kenneth Squire

The 13D Activist Fund, a mutual fund run by an affiliate of the author and not connected to Barron's, has no position in the securities mentioned here. In addition, the author publishes and sells 13D research reports, whose buyers may include representatives of participants in, and targets of, shareholder activism.

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